Further House Prices Falls As Consumer Confidence Slips
Published: 6 October 2010
By MoneyHighStreet Staff Leave a Comment
Updated: 6 October 2010
The number of mortgage backed house purchases fell dramatically in September pointing to weakening house prices as consumer confidence fades.
Figures published in the latest mortgage index from John Charcol show a significant drop in the number of mortgage purchases in September.
This illustrates the current weakness in the housing market as consumers fear that the economic situation may get worse in month to come, as Drew Wotherspoon, director of marketing at John Charcol explains:
“With renewed fears of further house price reductions and more than a whispering of an overall double dip in the economy, it seems that buyers are currently thinking long and hard before committing to purchasing a new property. Consumer confidence plays a huge part in the housing market and, put simply, it appears to be wobbling. As well as shrinking considerably as an overall proportion of transactions, in pure numbers terms purchase business fell by almost 20%.”
The reluctance to move up the property ladder at the moment may be triggering a resurgence of interest in remortgages as homeowners improve their existing property rather than buying another.
“At the same time remortgages appear to be making a comeback. Of course, the very nervousness that is keeping purchasers away from the market is arguably convincing those who have held off remortgaging for some time to both literally and metaphorically get their house in order.
“In just one month, the number of remortgages arranged with John Charcol has increased by a fairly dramatic 35%. Whether this is a mere blip, or a sign of things to come will only be seen in the coming months.”, Mr Wotherspoon continued.
The emergence of some cheaper mortgage products may make obtaining finance more attainable, however a fall in the number of first time buyers may negate any beneficial impact that better mortgage deals may have on house prices.
It may be fading confidence in the market and the economy that is deterring first time buyers at the moment, comments Wotherspoon:
“After seeing a sharp leap in August, the number of first timers entering the market came down to its normal level, around the 7% mark. Of course, with much negative talk around the market, and a continued lack of first time friendly products, it is little surprise to see this figure so low.”